we are not even discussing it at all. >> obama is president, but he is not king. they should not be handled by an executive order. stuart: well said by everybody. i want to get back to charles. gun violence in the inner-city is not being addressed. charles: i do not know why the president will not take a platform. listen, at the end of the day, what drives people to do these things, i am talking about the prisons and a lot of the kids who shot each other for nothing. stuart: what are you doing about this in your own city, the mayor of chicago? dagen and connell, it is yours. dagen: bonds and games. video games at the center at the

gun talks. connell: the cbcs latest report is expected in this hour. dagen: more and more people own their homes outright. no mortgages, no homes and how many of these are young folks. connell: american express is shedding workers. dagen: top of the hour. stocks now and every 15 minutes. nicole: small the client at this hour. we are still holding onto gains. one of the things that is weighing on the market today is blowing. shares are selling off by about 2.5%.

lots of issues for boeing this week. today we heard of cracked glass as well as another oil leak. they are looking into the issue. they will launch an investigation. you know, they would fly on the plane and you would think they would fly higher on that. back to you. dagen: thank you. it was secretary of transportation. he said he would have no reservations boarding a plane and taking a flight right now. it does speak to these officials trying to reiterate the safety of these planes. connell: another thing we are keeping a very close eye on is the videogame industry.

dagen: monica crowley is a syndicated radio host, fox news contributor, what you have to say? there is room for compromise between republicans and democrats. >> the new town massacre was so particularly horrific. i think when they are talking about a national database, i think you will get a lot of pushback from conservatives on that issue. if you want to go purchase a gun, your name will be entered into a national database. we will have to see what comes out of this at the end. one of the reasons this is such a complicated issue is because it involves so many constitutional issues. he invented the videogame

industry. they are under enormous pressure now because so many of these at risk youth that take on these fast murders are videocameras. also, movies. hollywood. some members of that industry now sitting down with the vice president as well. we have first amendment issues. connell: that is where we pick up the story from an investment. in short, no. it is just being brought up for political reasons. >> i think the conversation after a massacre happens. people always try to look for a cause. there are some suicidal influences out there whether it is hollywood, violent video games, etc. hollywood is dominated by the

left. dagen: people they look for a cause, but they are looking for whether he was mentally ill, it is the means to that and that they are concerned with. the assault weapon ban does not seem like that is the way that both the democrats or republicans would want to do it. >> it is interesting because the gun control issue is not per se a light or left issue. middle america, you see a lot of democrats from pig hunting states who are resistant to this kind of thing. i do not think you will get a full assault weapon ban this time around.

you know, you can try to mitigate these kinds of things. you can try to limit the violence to the extent that you can. background checks, that kind of thing. in the end, you will not be able to present all of this. so many of us have an emotional reaction. dagen: very interesting that you pointed out that it is a regional issue. it makes it very difficult to talk about. >> that is also why you cannot get a consensus. dagen: very good. monica crowley, thank you. connell: also, the news that came out of american express. they plan on cutting jobs. ford is planning on hiring workers. earlier this morning, we were

talking with ford and we asked him if this trend of hiring u.s. workers will continue. >> in fact, you are right, 1000 jobs were brought back into our plant from places like mexico and japan. we could do efficiently and affordably with our contract that we developed. i think you will see more of that. connell: we bring in a analyst from wells fargo. more high tech workers and all of these things in cars, will they be acting like american express and doing less because of technology? >> i tell you, i think we will see unemployment, i think we will see the brake improved, the

labor market will improve. companies are in business to make money. when they see their business increased to the point where they need more workers, they will hire more workers. when they are uncertain, they probably will not. when they see on performance that they will cut back on their employment. technology it allows companies to run more efficiently with fewer people. if companies think times will be good and improving, they are more than willing to hire. they are just uncertain right now. connell: the deep recession we just came out of, are we in the new normal that so many people have talked about?

>> i wish i knew what the new normal unemployment rate was. i think it is higher than what it was in the past. we are seeing a secular high unemployment rate. i think some of it is difficult. when the economy improves, it will get better. we have a big skills gap and it is hard for me to think that unemployment will work its way down to the levels we have seen in the last 15 years or so. some of it is structural. 40% of the people unemployed have been unemployed for that long. there is a big skills gap. things change quickly. connell: thank you very much, scott. >> happy new year. dagen: that is what i was trying to get out with joe.

he did not quite give me a great answer. moving on to another major story that still continues to worsen. we are talking about the flu. pennsylvania having the worst season in years. connell: rick leventhal has more on that. >> the hospital officials tell us that the capacity was overwhelming. they could not handle all the patients that were coming into the er with flulike symptoms. they set up this tent outside the emergency room. everyone comes in the front door. they are evaluated. if they are severe, they are brought in and given a hospital room. the numbers have spiked here in pennsylvania over the last few

weeks. it is widespread. we have seen 11,000 cases so far in the state. 4300 of them in the last week alone. things are probably going to get worse, according to the experts. it certainly seems to be trending in that direction. >> we have not reached a peak yet and we do not know when that will be. the peak may be the end of january. it may be some time in february. when that will happen, nobody knows right now. patients are given these masks. everyone is being urged to stay home if your symptoms are mild. dagen: best advice of all. thank you for that. connell: we will have more on the story about dogs and a few

games that is taking center stage at the white house. is it more of the government's role to step in at this point? dagen: more and more homeowners do not have mortgages. find out how they are doing it and why. oil still trading sovereignly above $90 a barrel. ♪ [ woman ] if you have the audacity to believe

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♪ dagen: making it rain with charles payne. some of india's top software services. one provider raised its revenue forecast. charles: i do not know why the street did not dig it would be

that good. their numbers were fantastic. they came out in 1981. they have $250. they were the first company to offer their employees stock options. they started with that out sourcing. even though the stock is up a lot, watch it for a few days. also take a look at cognizant. it is an indian company. they report on february 7. this has always been one of my favorites. there is another group. i am not so sure about this one. i don't know, it has become a collective business that is harder to understand. india is a wildcard. they will grow about 6% this year. and a lot more in 2014. we keep talking about china a

lot. connell: thank you very much, charles. dagen: quarter past the hour. stopped now and every 15 minutes. >> their holiday sales were flat . that usually means they have fails the clients. they saw strength here in the united states. the new plan is working. best buy and unusual winner today. i also want to take a look at the bond market. the dow jones up about three points right now. the sectors that are showing strength are staples, energy and technology. back to you. connell: thank you.

dagen: the controversial topic of video games and nonviolence. so the government regulate this industry? connell: the chief executive officer of apple says china will some day be his company's biggest arc appeared we will talk or about that as well. speaking of going global, look at some of the currencies around the world. we will be right back. ♪ [ malennouncer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations,

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>> at 21 minutes past the hour, i have your thoughts news minute. president obama and ask any president meeting at the white house today. the war formally ends in 2013. a conference is planned this afternoon. the president is not expected to announce any decisions on future troop. the blast occurred in the southwestern city of kut the. most of the people that were

muslims. it was followed by a car bomb minutes later. but -- boeing 787 are safe. a battery fire and a fuel leak and 787 operated by japan airlines. they say they welcome the review which is not expected to ground planes or halt production. those are your headlines. connell: thank you very much. the vice president joe biden meeting with some big names in the video game industry. dagen: dennis kneale is that a game stop. dennis: we are here now with todd mitchell of green capital. he follows the videogame business for his clients. thank you for being with us. all the stocks took it after the

connecticut shootings. which one are you recommending right now? >> we are recommending activision. we have a hold on take two. dennis: why do you have a hold on take two? it is shooting people in the streets. >> we have some concerns about the exposure to this incident. it is more of a structural issue of them not being able to transition to a digital model. dennis: the game makers are going to more of an online model. now, sales in december fell 20% from a year over go. in 2012, sales fell 22%. do you think the sales were hurt by the connecticut shootings? >> on the margin, no. dennis: overall, you are saying

30% fewer games. the revenue went down 22%. >> i do not think we are in trouble. we are looking at retail sales here. i highlight two factors. call of duty and halo sold very well. on a current game basis, use all revenues per game go up 11%. there is a lot of less product going through the retail channel. dennis: is the video game industry and a hard place in terms of how vigorously they can afford to push back and say, look, games do not kill people, guns kill people? >> i think it is a pr issue more than a sales issue. they are going after the easy target. dennis: the easy target versus the hard target did the nra turned a bunch of negative

criticism onto hollywood and the game industry. >> yes, they did. this is a global business. they play the same games in europe and japan. dennis: it is a matter of guns rather than games. what else might the industry come up with here. >> i think there has to be a message delivered about the content. there is a rating system. it has to be enforced. parents have to be aware of what their kids are playing. the real issue is not that games. little boys have always played with toy soldiers. that is not the issue. i rub her that people were worried that my james bond kick would turn violent.

back to you, dagen and connell. dagen: thank you, dennis. he deserves credit for that. connell: we will have more on that videogame story throughout the day. we will also have more on this flu story. the cbc is about to deliver an update. as soon as it does, we will have it for you. dagen: more americans own their homes outright. no note that they have to pay off monthly to the bank. they are a lot of young people. we will find out why. here are a lot of today's winners on the s&p 500. ♪

dagen: bottom of the hour. stocks now and every 15 minutes. >> let's go over to the post. wells fargo, the biggest home lender out there. 34.95 is your level. the good news is profit rose to a record high. made money with mortgage fees. no dow the housing market has turned a corner. they you have the bad news.

wells fargo numbers could affect all of the banks. as for stocks overall, kind of flat. coming into the session, still higher on the week. we still have markets higher for three of the past four weeks. back to you. dagen: more americans are saying so long to their mortgages. close to one third of u.s. homeowners have no mortgages and many of them are young. alex sharpton is joining us from austin, texas. good to see you. is this in-line with the historical trend of how many people have no mortgage at all? >> it absolutely is. and a lot of people would be surprised to hear that historically between 30 and 40% is the average of people who do not have a mortgage. we are actually a little low.

the biggest surprise is the percentage of younger people that do not have a mortgage. that is impressive. dagen: that is impressive. it is not surprising if it is an older person. is it because younger owners, because they are buying foreclosed properties or distressed properties and that really requires an all cash payment? >> yes. absolutely. it is probably a combination of things. mortgage standards have tightened up. parents are buying the houses and doing a private target. maybe we are looking at private mortgages that are not being recorded. there is a high probability of interest among younger buyers.

they stopped up the foreclosures and now they are living in them. i think it is a combination of things. overall, in a healthy market, we will have a third not having mortgages. dagen: i look at it from the opposite. i think it is perfectly healthy to have some home that. you get this on meds tax deduction. that becomes more valuable the wealthier you are. if the home falls in value, if you own it outright, you are the sole bearer of that loss. >> at the end of the day, there are arguments either way. i am a huge supporter of mortgage debt that can be paid off over time. i think what will be interesting, over the next

decade, we will see the percentage of people paying off their homes increased because they will have lower payments. the interest write-off is fantastic. having no mortgage payment is not bad. dagen: why do you own it outright? >> i would love to tell you that there was some philosophical thing for my wife and i. in 2008, we were taken under by the florida real estate market. we ended up in bankruptcy stay. once you go bankrupt, it is hard to get a loan. we saved all the money. we bought our own home and we have several investment that we bought cash out right. it can be done. now that we own the homes, banks are willing to lend us money. we made a decision out of necessity. on a monthly basis, not having

that payment that you have to live with is fantastic, but we do miss the mortgage interest deduction. dagen: alex, you told it how it was. thank you for that. >> take you for having me. connell: another big piece of news we are waiting for is the latest crop report. dagen: jeff croft says all about crops at the cme. jeff: this is the biggest crop report. i just want to take a quick look at corn. why is this the biggest report for traders of the year? >> it sets the tone for the rest of the year. some of the limit moves have been either up or down. we just do not know. jeff: and less than an hour, we could get limit in corn and

beans. >> i think we got a little bit ahead of ourselves. i think we got a little ahead of ourselves. we will get ready. jeff: we will be live during the noon hour. what do you expect this to look like in here? >> it will be really quiet at 10:59 a.m. they're not 11:00 o'clock, you'll probably have some gasps. jeff: now you are breathing

headlines. >> that has been a key component. we cannot really complain too much. jeff: okay. very good. good luck today. back in about 40 or 50 minutes. no, 25 minutes. connell: we have the whole thing under control. jeff flock. something new for us to talk about. dagen: tim cook has his eyes on china. china critical to the company's future. connell: we will tell you which airline tops getting you there on time. dagen: former senator phil gramm stopping by to talk about when energy. take a look at how the economy is faring. near the high end of where the ten year yield has been.

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>> hi everyone. i have your fox business free. the trade deficit expanded in

november. merck is suspending the sale of its cholesterol drug worldwide following a recommendation from the european agency. the drug was under review after a failure of a major study raised safety conditions. they are reviewing treatment plans for patients taking it. it has not been approved in the u.s. the u.s. postal service is getting netflix and unfair advantage. the decision is a win for the game. that is the latest from the fox business network. giving you the power to prosper. ♪ [ male announcer ] where do you turn for legal matters? maybe you want to incorporate a business. orrotect your family with a will or living trust. and you'd like the help of an attorney.

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connell: breaking news on the flu. the cdc is out with these new numbers. it is kind of interesting. you may make an argument that it has peaked in some areas. more states are reporting symptoms. forty-eight states where the flu was widespread. that is compared to the 41 the week before. another thing we have been looking at is googles maps where they show some of the most recent trends. we will get to this in a second. even though it is and more states, according to the cdc, will you also see is that there is some more mild cases being reported and the only states without widespread flu are mississippi and hawaii. this is important. we will make this map a little bit bigger. the darker the red, the harder hit the states are. there are barely any area. maybe out a little bit west.

the california and nevada area that are not as dark as the rest of the country. the entire united states is in a dark. the hardest hit states actually dropped from 29 to 24. that is probably a good sign. the hardest hit areas are dropping. i do not know. we will see what that weeks data shows. dagen: code red. apple's ceo telling a chinese news agency that he expects china to overtake the u.s. as the tech giants biggest market. he believes strongly that it will happen. he gave no idea when. china is currently apple's second largest market. growth has slowed in the last year.

again, losing market share globally to googles android system is why it may be coming out with a lower costly iphone. no airline did a better job with on-time arrival dan d. almost 80% of delta flights arrived within 15 minutes of its scheduled time. what a waste. half of the food produced worldwide those right into the trash. it is partially due to problems in the supply chain. the plan also falls on the shoulders of consumers and retailers. this is according to a new study by britain's institution of mechanical engineers. not me. you know, if it is two weeks

past the due date -- i give it a shot. just alert your friends and family i may have to take you to the hospital. connell: more technology here with pc sales down. smart phones over personal computers. dagen: shibani joshi has the latest. shibani: new data out showing that pc sales and pcs were not a favorite president delivered under the christmas tree this year. new data out showing that the pc market is under pressure. tablet sales and smart phones are more popular. idc just reported that sales for

2012 were 89.8 million pcs shipped in the fourth quarter. that is down 6.4% year over year. if you look at all of 2012, it was not any better. 252 million pcs sold. that is also down. the calendar year is expected to be a little bit better. the reason for the pc industry problems are no surprise to you, slow fashion with windows eight. then, the refresh cycle. people were updating their pcs about every five years, now they are doing it every ten years. connell: we are all over it. you are right. using the tablet here on set. shibani, thank you. dagen: you do need pcs.

if you have any security problems, you have to go onto a computer. it is almost impossible to really deal with that with a tablet or phone. connell: i use one here in the office. that is about it. dagen: stocks now and we try to do it every 15 minutes. >> you guys are making me laugh. you are a little bit late coming to me today. jcpenney, what a bad week for them. down by 6.5% today. analyst concerned about their turnaround strategy. the next three names, lots of consumer names doing really well. facebook is up 10% this week. they have their big media meeting on tuesday. we will see what they are building. coach and no kia looking good. back to you.

dagen: thank you, lauren. connell: we are still talking about the fiscal cliff. when energy is coming up. we will hear all about it. dagen: more winners on the nasdaq. the local this is $100,000. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally.

connell: it is part of the fiscal cliff bill that congress passed. the wind production tax credit. it has been cited by many

republicans. with us now from d.c. is a former republican senator. what is the issue with this wind production tax credit? >> i think the two big issues are the wind credit costs a very large amount of money. and secondly, it distorts the whole production process because the subsidy is so big that the producer of wind electricity can actually pay the power grid to take the electricity. that pushes off the grid power sources like natural gas generated power that are much cheaper. they are more reliable. what is happening, for example in west texas, you have so much solar power now that when the wind does not blow or a close to hard, solar power is in the process of driving other power

sources off the grid. you have the potential for brownouts and blackouts. connell: people, by the way, that support this tax credit, they are upset that it only gets extended temporarily. what should we be doing? should we be pursuing alternative energy? should the government be helping us? or should we get out of it altogether? >> look, i do not object to engaging in primary research. once you get to the commercialization phase, i think government has proven it is incapable of doing that. wind energy is 2000 years old. the windmill is one of the most old devices in terms of an energy source that exists. this is not new technology. there is no evidence that once they produce wind bells on a

mass production bases that we had any type of technology breakthrough that will lower price. it will make us competitive. i do not think most americans do. connell: senator graham, it is a big topic. thank you very much for coming on. dagen: ruby tuesday is another casual dining chain under pressure. higher taxes hit consumers. connell: that sounds like the trade today. sandra spent this year. sandra: it is an interesting stock. bringing up ruby tuesday. it is one of the casual dining

chains. it reported a bigger than expected loss in analyst had been expecting. higher minimum wage costs. they are also facing consumers that have a little less disposable income that they have in their pocket. i just got off the phone with brian elliott. he is an analyst over at raymond james. he is talking about feeling the bite. he says historically when consumers probably the reduction in purchasing power, restaurants are negatively impacted. this is a very negative risk right now. about the stock itself, they are saying after that stock of eight dollars a share, the valuation looks pretty good. they like it a lot. cheesecake factory and yum brands, we will talk about that in another hour or so.

there are some winners out there despite all of the concerns. dagen: the latest crop report coming out in a few minutes. connell: adam shapiro is coming up in a few minutes. he was talking to bernie madoff. i am

>> announcer: you never know when, but thieves can steal your identity and turn your life upside down. >> hi. >> hi. you know, i can save you 15% today if you open up a charge card account with us. >> you just read my mind. >> announcer: just one little piece of information and they can open bogus accounts, stealing your credit, your money and ruining your reputation. that's why you need lifelock to relentlessly protect what matters most... [beeping...] helping stop crooks before your identity is attacked.

and now you can have the most comprehensive identity theft protection available today... lifelock ultimate. so for protection you just can't get anywhere else, get lifelock ultimate. >> i didn't know how serious identity theft was until i lost my credit and eventually i lost my home. >> announcer: credit monitoring is not enough, because it tells you after the fact, sometimes as much as 30 days later. with lifelock, as soon as our network spots a threat to your identity, you'll get a proactive risk alert, protecting you before you become a victim. >> identity theft was a huge, huge problem for me and it's gone away because of lifelock. >> announcer: while no one can stop all identity theft, if criminals do steal your information, lifelock will help fix it, with our $1 million service guarantee. don't wait until you become the next victim. you have so much to protect and nothing to lose when you call lifelock now to get two full months of identity theft protection risk free. that's right, 60 days risk-free.

use promo code: gethelp. if you're not completely satisfied, notify lifelock and you won't pay a cent. order now and also get this shredder to keep your documents out of the wrong hands-- a $29 dollar value, free. get protected now. call the number on your screen or go to lifelock.com to try lifelock protection risk free for a full 60 days. use promo code: gethelp. plus get this document shredder free-- but only if you act right now. call the number on your screen now! dagen: coming up on noon eastern time here on "markets now. hello, i'm cheryl casone. the latest crop report coming up and what it means for the economy, coming up. guns and your kids. my co-anchor, dennis kneale with a report on whether washington has a role in policing the

business. new figures on how many americans have the flu. some states classifying the outbreak as an epidemic. we'll have the latest for you. bernie madoff speaking out, talking with our own adam schapiro, will be here later on in the show. stocks every 15 minutes as we always do. we have team coverage for you. jeff flock is live in the trading pits of the cme with today's crop report. first, lauren on the floor of the new york stock exchange, lauren? >> mixed markets, but the dow is higher, near a session high so we are getting me men tum building, the s&p 500, broader market, the stocks we all own in the 401(k) ect. was at a five year high and pushing close to the all-time high, over october 2007. up for the week, looking to be higher for two weeks in a row. over to jeff with the crop report, hey, jeff.

>> boy, the bulls are going crazy here now. we were down in both corn, oats, and wheat going into the market, and they slipped around to the green. it looks like -- i'm going to get virginia if i can, in the middle of trading, but i want a trader reaction. extremely bullish, that is to say, you were harvested acres, and let's see if virginia has a quick -- what do you got, virginia? bullish. >> very bullish. the market spiked up 25 cents on the week, came down, but we'll start off strong, certainly for, you know, this quarter of the year. >> looks like less out there harvested and less crop up. >> that's correct. depends on what happens. with the heat in australia, this market could go crazy by summertime. >> you like that. get back to it. make money too. that is the pit right there. you can see how crazy that thing is going right now. look at that.

i just love to listen, don't you. >> mark! cheryl: the biggest headline what you're hearing on the report right now, in your opinion, from what the traders are telling you. >> less harvested acres, less crop available, and, you know, we had a drought, the market pulled back because they thought the drought was not as bad, and usda says, yeah, it was, and we have the overhang of another drought this year. that's bullish. should bring a lot of dollars in. cheryl: thank you, jeff. thanks to lauren, see you in 14 minutes from now. well, american express, morgan stanley both announcing massive job cuts for 2013, and my next guest says until companies stop cut and begin to spend on themselves, the markets and the economy will be stuck in neutral. chad morganlander, portfolio manager is here. you are worried, number one

issue? >> right, a direct correlation between the deacceleration of capital spending within the u.s. economy and revenue growth on the s&p 500. until you see spending come back in a vibrant way, you'll be stuck in the mud. keep in mind, though, earnings are good. operating margins at a historic high, and revenues, flat lined, but at a high side. cheryl: watching the financials, heard from wells fargo this morning, your thoughts on that stock, and overall, banks come out. best sector for 2012 might be the best for 2013. nothing's moving right now. >> the financials should be overweight, the federal reserve is pushing monetary supply aggressively, and you see qe3 go from $4 trillion to $5 trillion by 2014. also, housing is starting to improve. as housing gets its sea legs and starts to go higher, that will

shore up the balance sheets of banks. cheryl: e infinity is what i call it, but what point does inflation creep back? you mentioned housing, that could push inflation numbers up at the second half of the year, a market negative. fed has to do backtracking before they want to. >> i don't expect inflation kicking in in 2013 or 2014, and, ncht, -- in fact, i'm not surprised to see the federal reserve lift the inflation target from 2% to 2.5% to give them the power to continue with quantitative easing. expect global growth to reaccelerate, but in particular, here in the united states, for reacceleration of the u.s. economy once capital spending kicks in after you get through the negotiations in washington. cheryl: that's interesting. we'll wait for the debt ceiling debate, which i know many of you watch at this point, but at the same time, let me ask you about

this. you mentioned housing. we have numbers from wells fargo, and i wanted to follow-up with you. a big piece of the business is mortgage lending, especially in the western part of the united states seeing an overall pickup. is that a bullish sign? >> extraordinarily bullish, okay? households are starting to reemerge and relever their balance sheet which is actually what dpsh go back, okay, what created the financial debacle in the first place is there was a curtailment of debt, and now it's reemerging and that should create an e quill lib yum within the credit system forcing the u.s. economy to grow in 2013, but we expect that in the later half of 2013. cheryl: the consumer's balance sheet, we have retail numbers out for december, and it was a rough fourth quarter, and i think that that's got some concern about the consumer overall, and if they are going to continue to power some of the big down movers we are watching. >> right.

when you look at retail sales, i mean, look, i understand when you look at target and walmart, but really look at auto sales and housing sales, and you are starting to see a reemergence and slide to demand. that is very positive. that's why i think the household, in general, is williig to take on those big ticket items again, and slowly moving the economy forward. cheryl: more americans paying cash for homes, not taking out mortgage, not that the banks would give that to them anyway. thank you, chad. >> thank you. cheryl: good takes from you, and there's more around the country, including this. the afghan president karzai capping off the trip to washington with president obama today. at issue here, the u.s. plans 2014 withdraws from affection, and whether president obama will leave a force in the torn nation. what is the significance of the bilateral talks? what do they mean for u.s.-afghan relations? james jeffrey joins me from

washington, george w. bush's national deputy security adviser and former ambassador to iraq. thank you for joining me, and i want to ask you, first, about this conversation. they are having lunch right now as a matter of fact as we speak. we're going to hear from them in the next hour. how is the relationship at this point between the two presidents? >> well, the relationship is good, but it is also strained by the fact that we have expectations of the karzai government in terms of the elections in 2014 where president karzai cannot run the candidacy again, and the nature of the election, issue of corruption in the election and, also, more importantly in the government as a whole, and how they will sustain the fight against the taliban after most american troops are gone. when i say "most american troops," i'm leaving open the doors the president has for leaving behind a training advisory and counter terrorism mission of some thousands of troops. the president wants to do this

as he did in iraq, the hang up as also in iraq is whether the afghani government grants a status of forces agreement that will give us legal immunity for our troops. that's the american military presence around the world. we have it now in afghanistan based upon u.n. and other considerations, but that expires in 2014. that's the key issue that they are looking at right now. what president karzaiments beyond some troops is military support in terms of funding equipment and also economic assistance. cheryl: not a lot of willingness on either side to come to an agreement, we hope there's a sense today on what u.s. troops are doing in afghanistan after 20 # 14, but there are some of the democratic party that say we need to pull all troops out of afghanistan by 2014 with the resurgence of the taliban, is that a safe plan for the people of afghanistan?

>> absolutely not for the people of afghanistan and absolutely not for u.s. interests around the world, and marly, the broader middle east. there's a sense among the people i deal with throughout the region that after iraq, after urn certain initial actions in libya, lack of action in syria, and other things that have occurred, that the united states is pulling occupant and pulling back and is not engaged in the region. that's a recipe for trouble. that's a recipe for a return to real violence. that's not large number of troops who are concerned in america, about 28,000 troops kept in korea since 1950. no one. it would be the same with afghanistan. we have a large military force. we have almost 4% of our budget devoted to the military. we can certainly, easily afford this. it's not like the wars waged in afghanistan and iraq, a trillion dollars over a few years. this is something that's easy double and -- easily doable.

cheryl: trying times for the middle east overall. thank you very much. we'll hear from both men coming up at 1:15 eastern time, expecting a statement from both presidents. thank you, ambassador. >> thank you very much for having me. cheryl: bernie madoff speaking out on dark pools and regulations, sharing shots with -- sharing with adam. the new secretary of state, two guests with two very different opinions on this. as we go to break, though, take a look at oil. markets still in the lower $90 range anyway. down 59 cents, 93 and 23. we'll be right back. ♪ ♪

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>> we are making money with who else? charles payne, looking at search engine giant, and they are in china. i think it's one of the most fascinating companies, really. they have done something else out there. >> remarkable company, and, you know, there's a report out that says their internet traffic in china goes to 800 million. right now, it's at 530 million, by 2015. that's a big move. they are doing extraordinary well. the stock has been in a down trend, close above 115, that would be a huge break out for the stock. if anyone thinks they are chasing it, they are not. there's a lot of room to the upside. you know, it's a relatively cheap stock looking at the price to earnings ratio. price to earnings to growth, you know, the peg ratio, and the other things, i think the stock has a tremendous amount of room to the upside. cheryl: you know, one of the things, and also the chinese

version the youtube, big moves on both of the stocks yesterday. >> also all of them, and they are all coming on nicely. now, that's a characteristic of the stocks, though. they are a classic momentum names up or downside. when they start going, they really get going. if you get it, and it's going down, you can lose a lot of money quickly, but conversely, if you get it and it's going up, by the way, wall street looking for the company to grow annually, 36% the next five years, twice the sector. wall street expecting big things riding that chinese internet wave. cheryl: as the chinese economy improves, like 8% is not improving, but it seems like it's a good sector. >> i think so. i think you got to have exposure to it. cheryl: all right. thank you very much. >> see you. cheryl: let's go to lauren on the floor of the new york stock exchange. who is making money? >> this is making a dramatic move to the upside when the

overall market is not. shares surging just about 17.5%, near a nine month high. the news is they put out good numbers for the quarter and strong revenue forecast going forward. this used to be a market darling, always did well, very consistent, and stops now maybe the trend is coming back again, and some of the peers in the group like cognizant technology serging as well. stocks not surges, but the dow holding on to a five point game. nasdaq down by two points, and s&p down by just about the same. flat markets coming into the last day of the week, up for two weeks in a row, up for three out of the past four weeks. back to you. cheryl: multiyear highs last night, still going. we'll see you at the bottom of the hour. well, the man behind the financial world's largest ponzi scheme ever, bernie madoff weighing in on insider trading

and dark pools and more. adam has details. you heard from mr. madoff. >> another exclusive for fox business. madoff is talking about specific issues, and our deal with mr. madoff when we talked, or my deal with him was i will quote you in the entirety. he gets upset when people misquote him. it's coming from bernie madoff, take with a a grain of salt, but he's talking about an arbitrage strategy whether it's what he did which is convertible arbitrage, selling and buying assets for companies that will be merging, trying to take advantage of price differences, and the reason i chose to begin convertible arbitrage opposed to emergencier arbitrage because merger arbitrage is committed successfully with inside information. who has that? people on boards of directors. he says most of the firms practicing were the banking firms that sat on the board of the target company's firms like

goldman sachs and morgan stanley. take it with a grain of salt. he says what has changed recently, insider trading stuff, is the decision by the fcc to prosecute the worst kept secrets. what he's upset about and disclosed is going after the hedge funds, and he wants them, bernie madoff wants them to go after morgan stanley and goldman sachs and merrill lynch. they talked about new regulations coming on dark pools and bonuses, and says, quote, it was nice to see that fenra is getting around to dealing with the issue of wall street signing bonuses, and goes on to say, the problem is the pressure they put on bonus babies to generate large commissions promoting special products of the new firm to pay off the bonus costs and finally on dark pools. "wall street journal" had a letter to the editor over at

knight capital defending the markets. madoff says, "although i have the most upmost respect, there's problems with the letter in the journal supporting dark pools, while madoff and knight provided lower costs, this is different than the flickering quotes provided by high frequency trading terms." he's not a fan of dark pools or high frequency trading, and, in fact, his christmas eve e-mail to fox business laid out why he thinks this does not help anybody. from the word, the pen, to the computer of bernie madoff, you got it. cheryl: vocal on the keyboard, and he spoke to you. >> that's correct. cheryl: thank you very much. interesting from him is all i can think of. >> read the e-mail on foxbusiness.com. it's posted in its entirety. bernie, kept our word as always. cheryl: the more he talks, the most interesting certainly. great stuff from you.

well, flu season just kicking off, and some states calling it an epidemic. at a crucial time in u.s.-china relation, is john kerry secretary of state what the united states needs right now? as we go to break, though, take a look at currencies, how they fair against the u.s. dollar, more and more strength today in the euro, and, again, seems like the interest rate is not changing in europe really is propelling the euro higher, again today. ♪ [ male announcer ] how do you trade?

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cheryl: breaking news from goldman sachs, the economic research teams issuing a report just released as they are lowering the estimate for fourth quarter gdp. they are now saying fourth quarter is 1.3%, down a half percentage from the original estimate of the fourth quarter. why lower the estimate for the fourth quarter? weaker than expected trade data

is one thing they cited, so the november trade gap an issue, and also citing automobile imports, exports, consumer goods, imports, especially, and petroleum. they are lowering gdp economic forecasts for the fourth quarter of 2012. we'll get a reading later on this month. well, new data just released in the last hour from the center for disease control suggesting the nation's flu outbreak could be peaking now. the cdc shows the number of states with flu cases is increasing, but looking further into the report, the number of states dropped from 24 to 29 where it was last week. nonetheless, though, people are still suffering. fox news is at lee high valley hospital in allentown, pennsylvania, one of the hardest hit states. rick? >> pennsylvania, win of the states with the widespread flu virus seeing a surge in the last

couping weeks, seeing dozens of extra patients walking in every day with flu-like symptoms. the hospital does not have room to treat them all inside, and, also, they want to avoid the staff and other patients from getting the flu so everyone who walks into the er is evaluated. the most severe are treated in the hospital, and the rest are cared for in the mobile surge tent outside. >> the capacity was overwhelming. not only with patients seen, but parties needing a bed to be admitted. this was an attempt to increase those who are otherwise healthy, have milder flu symptoms. we can see them, treat them, and discharge them effectively and efficiently from the tent. >> they are seeing them every single day, 11,000 cases so far statewide, 4300 of them in the past week, and 18 of the 22 deaths also in the past week alone. they are recommending that everyone get the vaccine if they no --

if they have not already. it's 67 # -- 67% preventative. if you have the symptoms, you probably don't need to go to the hospital. >> if you are sick, please stay at home. if you -- please use proper cough etiquette, wash hands, cover your cough, these are important things that every person can do. >> and the other important thing is the entire staff at the hospital is vaccinated and wear masks when dealing with people with the flu-like symptoms. cheryl: how are the hospitals handling the influx of patients? across the country, almost unbearable for some facilities. >> yeah, well, you know, the reason for the tent is just that. they don't have room for as many patients as are coming in here, and the other big point in pennsylvania and some of the other states is they may not have seen the peak just yet.

some states peaked, but places in pennsylvania and other states to the north will see many more patients throughout the end of january end of february. cheryl: rick, thank you for the report. appreciate it. >> sure. cheryl: as john kerry prepares to become the next sec -- secretary of state, it's the ties with china that could prove to be the greatest asset. plus, jewish themed beer? how one small company is literally putting the brew in hebrew. really, that's coming up. take a look at today's s&p winners and losers. some of the losers, best buy, netflix, and more. we'll be right back. ♪

>> welcome back, everybody, on the floor of the new york stock exchange, stocks every 15 minutes, and we are talking about jcpenney, stock down 5.%, down 12% on the week, and 44% decline in 52 weeks, certainly 5 loser. they are cut from neutral and cut the same store sales estimate for the holiday quarter to decline by 28%, and giving jcp a $13 price target. back to you. cheryl: we'll see you in 14 minutes from now. john kerry's nomination of secretary of state comes at a crucial time in u.s.-china relations. former state department official, donald gross, argues that kerry brings much needed improvement, and gordon chang,

author of "the coming collapse of china" says that relationship comes with risk. they join us now. gordon, i want to start with you, you do not think that our relationship with china is the main focus right now, and that if john kerry is secretary of state, he's not even the right guy for the relationship. why? >> well, i just got back from new dellly -- new delhi, and they are concerned about that because he's pro-islam bad. the united states has to neuroture the relationships with japan, south korea, and india. india will be the most populated nation in the world in 15 years, and only stable relationships with democracies is all we can count on in the long run. cheryl: donald, what about the economic relationship with china? there's many companies, individuals, i mean, we got a lot of businesses crossing the seas now with the country. don't we need the relationship to get better? >> we do need it to get better

both in the economic area and in the security area. in fact, john kerry has said we, the united states, need china, and china needs us so we have to get the relationship right. in the case of -- on economic issues, china's our third largest export market. it's actually the largest growth market in the world for u.s. goods and services. on the security side, we have syria's problems with china right now. potential problems, points of friction, and john kerry is just the right person at the right time, in my view, to bring to bear not only his diplomatic skill, legislative skill, understanding of the u.s. congress, u.s. politics, but, also, his deep experience in vietnam, over the years, interest in asia, has a personal relationship he struck with the new president of china during the coming president's visit to the united states. he understands china.

he knows that we need to find commonground with china to address many of the global and transnational problems like proliferation of nuclear weapons, climate change, ect., and so i strongly believe he is going to be a great secretary of state and will be especially helpful in dealing with china. cheryl: okay, donald, you have the economic piece of the argument, but, gordon, again, you say kerry is not the right representative and is misguided in how he is handling the issue of china because of his relationships with, you mentioned pakistan in particular. >> personal relations with clie these leaders do not mean kneeing. they are ruthlessly pragmatic. he just said we need china. that's the wrong thing to say. cheryl: don't we, gordon? >> we do, but they need us more than us needing them. cheryl: how so? >> they have the surplus against the united states in 2011 was 190.5% of the overall trade

surplus. china cannot replace the american market, but we can replace china. cheryl: investors making money hand over foot on chinese companies, there's more ipoing on the nasdaq than u.s. companies. that's been the trend for years. american ceos can't wait to get on the ground in china to profit from those billion people that are there on the ground, and kerry seems to, i would assume understand that, that crucial piece of the relationship. >> you know, the question is how well u.s. companies are doing. i think that companies will do well. mcdonald's will do well, but caterpillar's having trouble in china because the economy there is faltering. you see companies like general electric bringing back manufacturing to the u.s. because they know there is a problem there. chinese companies are manufacturing, i mean, are investing around the world because they don't have the opportunities at home. that should be a real signal to us.

cheryl: but, gordon, do you think -- >> cheryl -- cheryl: agree or disagree, please. >> i want to take issue with what gordon said, especially with respect to the new incoming president of china, ping. gordon dismissed him as someone who would follow the dictates of the communism party as it is now. actually, he positioned himself as reformer op economic and political issues. you have to remember that he was a victim of the cultural revolution in china. he and his generation. he was sent down to the countryside for five or six years doing back breaking labor. he's experienced firsthand the human rights abuses that have been carried out in the name of the communism party in china. we have a very clear window of opportunity right now to -- for the new secretary of state, john kerry, for the president of china, for president obama to

build a new relationship, to overcome some of the serious problems we have, both on the security and the economic areas. i'm very hopeful that with his background and deep experience, senator kerry, soon to be secretary kerry, will build on his relationship with the president, and not take the communist party as a given, but help to support and spur, not only the economic reform, but the political reform which many people in china expect and hope for. it's, especially the united states, which is standing for the democracy in human rights around the world. cheryl: we'll be watching as secretary of state, the con confirmation hearings get andrewway. thank you very much. interesting discussion on china. appreciate it. well, a new twist in the shell oil rig that ran aground off the coast of alaska. the company is accused of tax evasion. yep. the violence in video games, a

controversial topic at the white house today. we're going to be talking about that in just a little bit, and my co-anchor, as we go to break, take a look at the ten-year treasury. it's flat today. ♪

♪ tracy: i'm tracy burns with the

"fox business brief," capital advisers preparing for at least $1 billion in client withdrawals. the hedge fund group faces continued regulatory scrutiny, and federal prosecutors have been trying to build an insider trading case against sac founder, cohen, and suspending the production worldwide following a recommendation from the european medicine agency committee. now, the drug was under review in europe after a failure of a major study raisedded safety concerns. the grinch stole christmas at toys "r" us. it fell 4.5% during the key months of november and december compared to a year ago. the company says weak demand for video games, electronics, and, well, toys hurt sales. giving you the power to prosper. a business you'd like to start. or questions about protecting your family

with a will or living trust. and you'd like to find the right attorney to help guide you along, answer any questions and offer advice. with an "a" rating from the better business bureau legalzoom helps you get personalized and affordable legal protection. in most states, a legal plan attorney is available with every personalized document to answer any questions. get started at legalzoom.com today. and now you're protected. ♪ [ male announcer ] this is karen anjeremiah. they don't know it yet, but they' gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. cheryl: what do you get when you mix judaism and beer brewing?

well, according to the next guest, you get an american-jewish celebration beer. small business, big ideas, this is the best. founder of scmaltz brewers, called hebrew. what inspired you? >> well, hebrew beer is the first and only jewish celebration beer in the united states, high end craft beer marketed to the jewish community and anybody else who loves great beer. cheryl: all my jewish friends are wine drinkers, is there the population? >> yes, we get the question all the time. i thought jews didn't drink beer. that was going to be the bumper sticker in the beginning. we play with stereotypes, and it's important to have a wonderful high end craft beer to celebrate jewish tradition, the calendar, but, also, now craft beer is popular and growing we want to make beers to stand with the best craft beers. cheryl: sales impressive, 125,000 cases sold, $3.5 million

in sales. that's not small, that's good. >> we're getting there. we're like a boutique wine brand. craft beer is growing, the segment is growing, but we're a tiny sliver of the overall beer market, and craft beer is up. it's a wonderful way for us to participate in this exciting time. cheryl: do people get offended by the idea? >> in the beginning people were surprised to see a dancing rabbi on a beer can, but after 16 years in business, it's been a wonderful way to celebrate what i'm proud of, participate in the community, and make great beer for anybody who likes it. cheryl: you went up to northern california? >> yeah. cheryl: from california? >> i grew up in california, started in the mission district in san fransisco in my apartment, brewing 100 cases a beer in a tiny brewery, delivered it in my grandmother's car around the bay area, and that's how it started. it is a tiny operation with 100

cases for hanukkah 1996, and this year topping out at 125,000 case us. cheryl: you have different, like, you know, brands, styles of beer with different names. what's the one you get the most reaction when you tell people the name of the beer? >> hebrew is the brand name, we have a brand called koney island laggers. it's a product brewed in new york, tied into the area, and celebrates the spirit, the craziness of koney island, itself, but in the wonderful high end craft beers. cheryl: get christian consumers? >> sell in whole foods, fareways, and bars around the neighbor. everybody who likes great beer can get excited about the beer. cheryl: great idea. very fun. appreciate it. >> thanks for having me.

cheryl: going to the stock market from a beer segment. lauren, take it away. >> i think the stock market needs a beer. we are fading. closing yesterday for the broader market at the highest level in five years, and now this is what is pushing and pulling on the dow, up 7 points. held together by chevron and merck, up more than 1%, but boeing, hp, bank of america all selling off between one and two-thirds and 2.5%. this is indicative of the day. some stocks up, others down, can't get traction going on. in terms of stocks overall, the materials are weakest sector today, miners and steel makers especially coming down. banks are weak today after the wells fargo earnings report. a lot of people disappointed there. back to you. cheryl: lincoln, thank you very much. see you at the top of the hour. ♪ and time for your west coast minute. new allegations as far assed against shell oil.

congressman ed penned a letter to a house committee alleging that the shell drilling rig that ran aground two weeks ago off the alaska coast for days was move in the first place to avoid higher taxes. shell denies this claim saying the vessel was moved for safety reasons. either way, the vessel is no longer in the area. despite a big increase in personnel, the u.s. border patrol is only stopping about 61% of would-be illegal aliens from crossing into the u.s.. new government report says there's a huge lack of operational control at the u.s.-mexico border as 208,000 illegal imgrants evaded capture along the border, especially in the states of arizona and california. in los angeles, residents may be in for yet another tax. a proposed pothole tax is floated to help the city pay for road repairs over the next 25 years that amounts to an extra $24 per home in property taxes

each year, on their bill, for the next 20 years. that is your west coast minute. okay. as top game makers come under scrutiny from dc over violence in the games, it is your portfolio that could be taking a hit. dennis kenale looking at the -- kneale looking at the business behind video games when we come back. first, a look at the winners over on the nasdaq. ♪ supply costs... down... ...and down. just use your maxperks card and get a case of x-9 paper

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cheryl: guns and video games. vice president joe biden meeting with big names in the video game industry to talk violation and games following the recent shootings. dennis kneale is outside game stop with how this could impact businesses, dennis? >> hey, cheryl, and we have a guest we're going to be interviewing with the international game developers association involved in the meeting at 2:15 p.m. eastern in the white house today with vice president biden. daniel greenberg is with us, and video games, daniel, have been basically under attack since the connecticut shootings. i mean, the nra, itself, took off after hollywood and violent video games, and then obama adviser david axelrod after the shootings tweeted that sure, ban

weapons of war, but, sure, quit marketing murder as a game. daniel greenberg, is what that the video game industry does? does it market murder as a game? >> no, not at all, dennis. i have to clear up one thing. the international game developers association is not participating in the meeting with the haven't. the publishers association, i believe, is there. we accepted your interview, of course, to speak to the issue today. no, violent video games do not produce real world violent. that's never been proven to produce actual violence. during the last 20 years when violent video games are popular, crime decreased in the united states substantially. if violence caused from video games, you would think the opposite would happen. some in japan, games are more violent than in the u.s., can want be sold here, but their crime rates are lower than ours.

the dutch have lower rates than we do with higher viability games than we do. it's unfair to include video games along with other things to be studied like mental health and guns. >> yeah. yes, and, yes, that's exactly what seems to be happening. now, your group, the international games developers association put out a letter to the vice president biden, and it said, in part, quote, governments should not be seeking way to constrain this emerging medium so early in its development scapegoating video games for societal ills." in connecticut, a neighboring town to newtown where shootings happened, there's an offer out to buy back, in essence, violent video games and destroy the disks, and they give people a coupon fora restaurant or bowling alley. is that what's happening in the society right now? are video games, indeed, scapegoated for societal ills? >> yes, i think so.

however, i mean, i support the right of anyone who buys a video game to dispose of it any way they like. if they want money from the government to turn it in, fine with me. i have no objection to that. i support people's rights to do with the things they buy as they please, but i'm much more concern about scapegoatingen an industry based on faulty science. science is essential. they never proved that causes real world violent, and, yet, people believe this myth like in the 50s people believed if they listened to elvis, their children would be juveniles. it was not true. they believedded comic books would do the same. that was not true. when the government was able to crack down on comic books, all they did was take away the kind of reading that young at-risk did for pleasure. they didn't actually reduce viefl delinquency by hurting the economic book industry. the same would happen today. violent video games will not

make children or adults violent. >> if you don't believe me check with the stream water. >> many are pushing for, yeah, it seems like americans, though, are pushing for something after the aurora, colorado shootings, 24% of people said it was a sign of deeper problems, and after connecticut shootings, 52% said it was a sign of deeper problems. best of luck to you in figuring out what the industry, if anything, should do about this. thank you for being with us. >> what i think we can do -- thank you. >> back to you in the studio. cheryl: dennis, reporting all afternoon on the story. thank you so much. appreciate it. coming up, business is optimistic despite uncertainty ahead. price water house -- waterhousecoopers joining us next, and we have the latest for you on boeing's struggles as the faa orders review of the airliners 787. "markets now"

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